Aon Plc raised $13.5 billion from a high-grade bond offering to help fund its planned acquisition of USI Insurance Services, marking one of the biggest M&A financing deals to come to market in 2026.
Investors placed as much as $65 billion of orders on the sale, with the longest maturity drawing the most demand, according to people familiar with the matter.
Aon sold notes in seven parts, with maturities ranging from three to 30 years. Price talk on the longest tenor tightened by 0.35 percentage point from initial discussions to a yield of 1.15 percentage points above Treasuries, a separate person said, asking not to be identified because they are not authorized to speak publicly.
The transaction came to market even as borrowing costs rose on Monday, with both credit and equity markets reacting to a call by the leaders of the biggest artificial-intelligence firms to slow the technology’s development. Meanwhile, a surge in oil prices has further fueled inflation concerns ahead of Wednesday’s Federal Reserve rate decision, worsening the backdrop for markets.
Last month, Aon agreed to buy USI from KKR and other shareholders in an all-cash $17 billion transaction funded with debt. The purchase, expected to close by year-end, is intended to expand the firm’s footprint with midsized corporate clients. Aon is one of the world’s largest insurance brokers, while USI provides insurance brokerage and consulting services to businesses and individuals.
The company is also expected to sell a $4 billion term loan as part of the deal financing, according to a S&P Global Ratings note.
All of the notes except the 30-year tenor would have to be redeemed at 101 cents on the dollar, plus accrued and unpaid interest, if the USI acquisition falls through or isn’t completed by Dec. 1, 2027.
Fitch Ratings on Monday placed Aon’s debt on Rating Watch Negative, saying the acquisition will “materially increase credit risk for at least the next two years”. Debt is expected to be roughly four times a measure of earnings through the end of 2027, Fitch Ratings said in a note to clients.
The $13.5 billion note offering marked the year’s second-largest high-grade bond deal tied to mergers and acquisitions, trailing only Abbott Laboratories’ $20 billion transaction in February.
The transaction comes during one of the busiest periods of the year for the US investment-grade market. Firms are expected to issue about $55 billion of high-grade debt this week, according to an informal poll of dealers. Last week’s $67.6 billion of supply ranked as the fourth-most this year.
Photo: The Aon Center in Chicago. Photographer: Christopher Dilts/Bloomberg
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